Lockheed Martin awarded $794.5M for GMLRS missile production, with a final value of $1.68B over 12 years

Contract Overview

Contract Amount: $168,821,584 ($168.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2005-01-31

End Date: 2017-09-30

Contract Duration: 4,625 days

Daily Burn Rate: $36.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200506!001531!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0018 !A!N! !N! ! !20050131!20070430!794571448!794571448!834951691!N!LOCKHEED MARTIN CORPORATION !1701 W MARSHALL DRIVE !GRAND PRAIRIE !TX!75051!30464!113!48!GRAND PRAIRIE !DALLAS !TEXAS !+000108565589!N!N!000000000000!1340!ROCKETS, ROCKET AMMUNITION & ROCKET COMPS !A2 !MISSILE AND SPACE SYSTEMS !260 !GMLRS !336414!E! !3! ! ! ! ! !20200930!B! ! !A! !D!N!J!1!001!N!1G!A!Y!C! ! !N!C!N! ! ! !A!A!A!A!000!A!B!Y! ! ! ! ! ! !0001! !

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $168.8 million to LOCKHEED MARTIN CORPORATION for work described as: 200506!001531!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0018 !A!N! !N! ! !20050131!20070430!794571448!794571448!834951691!N!LOCKHEED MARTIN CORPORATION !1701 W MARSHALL DRIVE !GRAND PRAIRIE !TX!75051!30464!113!48!GRAND PRAIRIE !DALL… Key points: 1. Contract value significantly increased from initial award to final delivery. 2. Sole-source award raises questions about price competition and potential overpayment. 3. Long contract duration suggests sustained demand for the GMLRS system. 4. High contract value indicates a significant investment in missile defense capabilities. 5. The contractor, Lockheed Martin, is a major defense industry player. 6. The contract spans multiple fiscal years, indicating long-term program support.

Value Assessment

Rating: questionable

The initial award was $794.5 million, but the final value reached $1.68 billion, representing a substantial increase. This escalation warrants scrutiny to understand the drivers behind the nearly doubling of the contract's worth over its lifecycle. Without detailed cost breakdowns or comparisons to similar missile production contracts, it's difficult to definitively assess value for money. However, the significant increase suggests potential for cost overruns or scope creep that may not have been adequately controlled.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific contractor possesses unique capabilities or intellectual property essential for the product. While this can ensure access to specialized technology, it limits the government's ability to leverage competitive bidding to drive down prices. The lack of competition means taxpayers may not have received the lowest possible price for the GMLRS missiles.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government cannot benefit from the price reductions typically achieved through competitive bidding processes.

Public Impact

The primary beneficiaries are the U.S. Army and its allies, who receive advanced guided missile systems. The contract supports the production of Guided Multiple Launch Rocket System (GMLRS) munitions. Geographic impact is national, with production likely concentrated at Lockheed Martin facilities. Workforce implications include skilled manufacturing and engineering jobs at the contractor's sites.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to higher unit costs.
Significant increase in contract value from initial award to final delivery.
Sole-source nature limits transparency in pricing benchmarks.
Long contract duration could mask inefficiencies if not closely managed.

Positive Signals

Ensures continued supply of a critical munitions system.
Contractor is a proven producer of missile systems.
Definitive contract type provides a stable framework for production.

Sector Analysis

This contract falls within the Defense Industrial Base, specifically the missile and space systems manufacturing sector. This sector is characterized by high R&D investment, long production cycles, and significant government reliance. The GMLRS is a key component of modern artillery and missile defense systems, making its production critical for national security. Comparable spending benchmarks would involve other large-scale munitions production contracts, which are often sole-sourced due to specialized requirements.

Small Business Impact

There is no indication of small business set-asides or subcontracting plans being a primary focus of this contract. As a sole-source award to a large prime contractor, the opportunities for small businesses may be limited to direct subcontracting by Lockheed Martin. Further analysis would be needed to determine the extent of small business participation in the supply chain for this specific contract.

Oversight & Accountability

Oversight is likely managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contract compliance and performance. Accountability measures would include adherence to delivery schedules, quality standards, and cost controls. Transparency is generally limited in sole-source defense contracts, but reporting requirements would still apply. Inspector General jurisdiction would cover any allegations of fraud, waste, or abuse.

Related Government Programs

Missile Production Contracts
Munitions Procurement
Guided Missile Systems
Defense Logistics Agency Contracts
Army Aviation and Missile Command Contracts

Risk Flags

Potential for cost overruns due to sole-source award.
Lack of competitive bidding may result in suboptimal pricing.
Significant contract value increase warrants detailed justification review.
Long contract duration requires sustained oversight for efficiency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $168.8 million to LOCKHEED MARTIN CORPORATION. 200506!001531!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0018 !A!N! !N! ! !20050131!20070430!794571448!794571448!834951691!N!LOCKHEED MARTIN CORPORATION !1701 W MARSHALL DRIVE !GRAND PRAIRIE !TX!75051!30464!113!48!GRAND PRAIRIE !DALLAS !TEXAS !+000108565589!N!N!000000000000!1340!ROCKETS, ROCKET AMMUNITION & ROCKET COMPS !A2 !MISSILE AND SPACE SYSTEMS !260 !GMLRS !336414!E! !3! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $168.8 million.

What is the period of performance?

Start: 2005-01-31. End: 2017-09-30.

What specific factors contributed to the nearly doubling of the contract value from the initial award to the final delivery?

The significant increase in contract value from $794.5 million to $1.68 billion likely stems from a combination of factors inherent in long-term defense procurement. These can include adjustments for inflation, incorporation of engineering change proposals (ECPs) to improve system capabilities or address obsolescence, increases in the quantity of units procured beyond initial estimates, and potentially the addition of related services such as testing, training, or sustainment. Without access to the contract modification history and detailed justifications for each increase, it is difficult to pinpoint the exact drivers. However, such escalations are not uncommon in multi-year defense programs where requirements evolve over time.

How does the unit cost of GMLRS missiles under this contract compare to similar munitions or previous production runs?

Benchmarking the unit cost of GMLRS missiles is challenging without access to specific pricing data and comparisons to contemporary contracts for similar munitions. As a sole-source award, direct price comparisons are limited. However, historical data and industry reports often indicate that guided munitions can have unit costs ranging from tens of thousands to over a hundred thousand dollars, depending on complexity and features. The total value of $1.68 billion spread over an unspecified number of missiles (though likely in the tens of thousands given the duration and value) suggests a substantial per-unit cost. Further analysis would require access to classified or proprietary pricing information to establish a definitive benchmark against market rates or alternative systems.

What are the potential risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risk of a sole-source award for a contract of this magnitude is the potential for reduced price competition, which can lead to higher costs for the government and taxpayers. Without competing bids, there is less incentive for the contractor to offer the lowest possible price. Additionally, sole-source contracts can sometimes indicate a lack of robust market research or an over-reliance on a single supplier, potentially creating vendor lock-in. This can also reduce flexibility if alternative technologies or suppliers emerge later. Oversight becomes even more critical to ensure fair pricing and prevent cost overruns when competition is absent.

What is Lockheed Martin's track record in producing missile systems, and does it indicate a history of performance issues or successes?

Lockheed Martin is a major defense contractor with extensive experience and a well-established track record in producing a wide array of missile systems, including the GMLRS. The company has consistently been a primary supplier for U.S. military munitions. While specific performance metrics for every contract are not publicly available, Lockheed Martin is generally recognized for its technological capabilities and production capacity in this domain. Historically, large defense programs can encounter challenges related to cost, schedule, or technical performance, but the continued awards and production of systems like GMLRS suggest a generally satisfactory performance history in meeting the government's requirements for this critical capability.

How has federal spending on guided missile systems like GMLRS evolved over the years, and does this contract represent a significant portion of that spending?

Federal spending on guided missile systems, particularly munitions like the GMLRS, has been a consistent and significant component of the Department of Defense budget for decades, driven by ongoing military operations and modernization efforts. The GMLRS program itself has seen substantial investment over its lifecycle. This specific contract, with a final value of $1.68 billion, represents a considerable portion of spending within the guided missile category for the period it covers. Analyzing historical spending trends for similar munitions programs would reveal whether this contract's value is typical, increasing, or decreasing relative to overall defense procurement patterns for such systems.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1701 W MARSHALL DRIVE, GRAND PRAIRIE, TX, 75051

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $5,012

Exercised Options: $5,012

Current Obligation: $168,821,584

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline